Coinbase CEO Brian Armstrong posted on the social platform X yesterday, calling for U.S. stablecoin legislation to allow users to earn on-chain interest, arguing that this would achieve financial fairness, benefit both consumers and the economy, and reinforce the U.S. dollar's dominance in the global financial system.
— Brian Armstrong (@brian_armstrong) March 31, 2025
Table of Contents
ToggleWhat is On-Chain Interest? Stablecoin Potential Not Yet Fully Unleashed
Armstrong noted that while stablecoins like USDC have successfully digitized the U.S. dollar, their potential remains suppressed:
Currently, stablecoin issuers invest reserve assets in low-risk targets like short-term government bonds, with the generated interest exclusively benefiting the issuers.
Therefore, he proposed the concept of "on-chain interest", similar to a digital checking account that can earn interest, hoping to allow coin holders to directly profit and challenge the traditional financial intermediary monopoly model.
On-Chain Finance Empowers Globally, Helping Billions Escape Financial Margins
He stated that the 2024 federal funds rate averaged 4.75%, while traditional bank savings accounts offer only 0.41%, even as low as 0.01%. Against an inflation rate of around 3%, consumers' assets are effectively shrinking:
If stablecoins could provide over 4% market-level returns, this would offer U.S. citizens a truly fair asset appreciation channel, which is especially crucial for low-income groups and helps narrow the wealth gap.
Armstrong emphasized that the potential of on-chain interest is not limited to the U.S. For residents without bank accounts or with unstable local currencies, stablecoins provide stable, instant, and low-cost financial services. With just a mobile phone and internet connection, they can enjoy U.S. dollar assets and returns, achieving global financial equality.
Crypto Dividend of US Economy: Seizing the Opportunity of Dollar Hegemony
Stablecoins have become one of the major holders of U.S. Treasury bonds, even surpassing most countries. Armstrong predicts that if the U.S. is the first to legislate and open on-chain interest, it will attract global funds to U.S. dollar stablecoins, reinforcing their global status:
This will further drive consumption, savings, and investment, becoming a powerful engine for economic stimulation. If the U.S. does not act, it will miss out on trillions of dollars in funds and potential dividends from billions of users.
Given that stablecoins currently do not enjoy securities law exemptions like traditional savings accounts, issuers cannot legally pay interest to coin holders. Armstrong also called for creating a fair competitive environment when promoting stablecoin legislation in Congress, allowing both banks and crypto companies to provide interest to consumers.
Interest Income or Not? Supporting and Opposing Voices Coexist
However, the U.S. market remains divided on yield-bearing stablecoin products.
JPMorgan noted that in the current high-interest-rate environment, yield-bearing stablecoins are attractive to investors similar to traditional money market funds, and they are optimistic that the proportion of yield-bearing stablecoins in the stablecoin market value could rise from the current 6% to 50%.
On the other hand, U.S. Democratic Senator Kirsten Gillibrand believes that stablecoin issuers providing yield-bearing products could threaten traditional banking, affecting their ability to provide mortgage and small business loans, and calls for strict regulation.
At the Crossroads of Innovation and Tradition: Is It Time for Change?
Finally, Armstrong also emphasized that the United States is facing a critical choice: "Is it to continue maintaining the old financial system that only provides 0.01% interest, or to embrace on-chain interest, stimulate innovation, and release market potential?"
He believes that true open markets and competition will bring higher-quality financial services, benefiting both consumers and the economy, and helping the United States maintain its leadership in the global crypto financial field.
Risk Warning
Cryptocurrency investment carries high risks, and its prices may fluctuate dramatically. You may lose all of your principal. Please carefully assess the risks.
